Smart Finance APP has learned that Citi noted the capital expenditure of the four major US cloud providers surged 79% year-on-year in the second quarter, with a slight upward revision to their full-year guidance. This indicates that the demand outlook has clearly extended to 2028, providing a structural benefit for AI infrastructure supply chain companies.

Citi stated that the Chinese optical communications sector may present a buying opportunity around the release of first-half 2026 results. Near-term catalysts include the CIOE (China International Optoelectronic Exposition) in September, the Alibaba Cloud Computing Conference (Apsara Conference), and ECOC (European Conference on Optical Communication). The bank also reaffirmed the 2027 industry outlook, along with improved visibility into CPO/NPO (co-packaged optics/near-packaged optics) technologies. Additionally, a strong sequential recovery in shipments in the second half of the year is expected to aid a sector valuation re-rating.

Citi raised its capital expenditure forecasts for the four major US cloud providers for 2026 and 2027 by 4.5% and 15.1%, respectively, reaching $754 billion and $1.112 trillion.